Key takeaways:
- The London Stock Exchange (LSE) will introduce exchange-traded notes (ETNs) tracking the performance of Bitcoin and Ether on May 28.
- An anti-money laundering licensed custodian in the United States, the United Kingdom, or the European Union must hold the underlying assets in cold storage.
The London Stock Exchange (LSE) will introduce exchange-traded notes (ETNs) tracking the performance of Bitcoin and Ether on May 28.
The notice from March 25 states that applications for the cryptocurrency ETNs can be made as early as April 8. Successful funds will be listed the following month, subject to the nation’s Financial Conduct Authority (FCA) approval. Issuers have until April 15 to submit a draft prospectus and a statement outlining how they satisfy the ETN standards.
The ETNs will only be accessible to professional investors due to the UK FCA’s restriction on the selling of cryptocurrency futures and ETNs, which was implemented in January 2021 despite significant investor demand.
Crypto ETNs can only be denominated in Bitcoin or Ether, and they need to be physically backed, non-leveraged, and have a consistent value based on the underlying market price in order to be approved. An anti-money laundering licensed custodian in the United States, the United Kingdom, or the European Union must hold the underlying assets in cold storage.
For the ETNs, issuers may submit up to three distinct currency lines. The LSE stated that conventional admission timelines do not apply to Crypto ETNs due to the nature of the product and the admission guidelines outlined in this Factsheet. They went on to say:
“Issuers and their advisers should therefore liaise with the Exchange at the earliest opportunity to discuss their proposed admission.”
Though it lacked a component for individual investors, the action is in line with the US Securities and Exchange Commission’s January approval of spot Bitcoin exchange-traded funds.
One of the objectives of the FCA’s two-year plan is to tighten its regulations against abuses of the cryptocurrency market. In order to address market abuse and integrity, the regulator will enhance its monitoring and intervention systems.
The FCA announced new regulations on cryptocurrency marketing in October of last year, pledging “robust action” against any suspected breaches.
